Laumann et al v. National Hockey League et al

Filing 115

MEMORANDUM OPINION AND ORDER re: (87 in 1:12-cv-03704-SAS) MOTION to Stay, filed by Comcast SportsNet Philadelphia, L.P., Root Sports Rocky Mountain, Comcast Corp., Root Sports Pittsburgh, Comcast Sportsnet Chicago, L.P., Directv Sports Networks LLC, Directv LLC, Comcast Sportsnet California, L.P., Root Sports Northwest, (90 in 1:12-cv- 03704-SAS) MOTION to Stay Notice of Joint Motion of the MLB defendants, The Yankee's and YES to Stay this Action, filed by Pittsburgh Baseball, Inc, MLB Advanced Media L.P., Chicago White Sox, Ltd., The Phillies, L.P., The Baseball Club of Seattle, L.P., San Francisco Baseball Associates, L.P., Major League Baseball Enterprises Inc., MLB Advanced Media, Inc., Colorado Rockies Baseball Club, Ltd., Athletics Investment Group, LLC, Officer of the Commissioner of Baseball, Office of the Commissioner of Baseball, Major League Baseball Enterprises Inc, (100 in 1:12-cv-01817-SAS) MOTION to Stay, filed by Comcast SportsNet Philadelphia, L.P., Direct v, LLC, Comcast Corp., Comcast SportsNet California, LLC, Comcast Sportsnet Chicago, L.P., Comcast Sportsnet Mid-Atlantic, L.P., Root Sports Pittsburgh, Directv Sports Networks LLC. Plaintiffs, subscribers of television and Internet packages for bas eball and hockey programming, brought two putative class actions against the National Hockey League (NHL) and Major League Baseball (MLB), various clubs within the Leagues, regional sports networks (RSNs) that televise the games, and Comcast and Dire cTV, multichannel video programming distributors (MVPDs). Plaintiffs, subscribers of television and Internet packages for baseball and hockey programming, brought two putative class actions against the National Hockey League (NHL) and Major League Ba seball (MLB), various clubs within the Leagues, regional sports networks (RSNs) that televise the games, and Comcast and DirecTV, multichannel video programming distributors (MVPDs). For the foregoing reasons, defendants' motions to stay are denied in full. The Clerk of the Court is directed to close these motions (Garber Dkt. Nos. 87, 90; Laumann Dkt. No. 100). (Signed by Judge Shira A. Scheindlin on 3/6/2013) (ja)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

THOMAS LAUMANN, FERNANDA GARBER,
ROBERT SILVER, GARRETT TRAUB,
DAVID DILLON and PETER HERMAN,
representing themselves and all other similarly
situated,
Plaintiffs,

IVIEMORANDUM

OPINION AND ORDER

- againstNATIONAL HOCKEY LEAGUE, et aI.,

12 Civ. 1817 (SAS)

Defendants.

FERNANDA GARBER, MARC LERNER,
DEREK RASMUSSEN, ROBERT SILVER,
GARRETT TRAUB, and PETER HERMAN
representing themselves and all other similarly
situated,

12 Civ. 3704 (SAS)

Plaintiffs,
- againstOFFICE OF THE COMMISSIONER OF
BASEBALL, et aI.,
Defendants.

SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
Plaintiffs, subscribers of television and Internet packages for baseball

and hockey programming, brought two putative class actions against the National
Hockey League (“NHL”) and Major League Baseball (“MLB”), various
clubs within the Leagues, regional sports networks (“RSNs”) that televise the
games, and Comcast and DirecTV, multichannel video programming distributors
(“MVPDs”).1 Plaintiffs allege violations of the Sherman Antitrust Act based on
defendants’ “agreements to eliminate competition in the distribution of [baseball
and hockey] games over the Internet and television [by] divid[ing] the live-game
video presentation market into exclusive territories, which are protected by
anticompetitive blackouts” and“collud[ing] to sell the ‘out-of-market’ packages
only through the League [which] exploit[s] [its] illegal monopoly by charging
supra-competitive prices.”2 Defendants jointly moved to dismiss the Complaints.
In an Opinion and Order dated December 5, 2012, I granted the motion in part and
denied in part.3

1

Two cases have been consolidated. Laumann v. National Hockey
League, et al., No. 12 Civ. 1817 (“Laumann v. NHL”), involves professional
hockey telecasting, and Garber v. Office of the Commissioner of Baseball, et al.,
No. 12 Civ. 3704 (“Garber v. MLB”), involves professional baseball telecasting.
2

Laumann Second Amended Complaint (“Laumann Compl.”) ¶¶ 2, 8;
Garber First Amended Complaint (“Garber Compl.”) ¶¶ 2, 11.
3

See Laumann v. National Hockey League, No. 12 Civ. 1817, 2012 WL
6043225 (S.D.N.Y. Dec. 5, 2012). Discovery commenced on December 19, 2012
and defendants filed Answers on January 17, 2013.
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Comcast and DIRECTV now move on behalf of themselves and their
affiliated RSNs (together “TV Defendants”) to stay the claims of the television
subscriber plaintiffs (“TV Plaintiffs”)4 pending the Supreme Court’s ruling in
American Express Co. v. Italian Colors Restaurant (“AMEX III”) addressing the
enforceability of arbitration clauses barring class arbitration as applied to federal
antitrust claims.5 The MLB, its various affiliates, and teams within the league
(together, “MLB Defendants”) separately move to stay Garber v. MLB in its
entirety pending the decision in AMEX III.6 For the following reasons the motions
to stay are denied.
II.

BACKGROUND
Pursuant to their contracts for television service, TV Plaintiffs have

4

Garrett Traub is the sole remaining Comcast subscriber in Laumann
and Garber. Robert Silver is the sole remaining DIRECTV subscriber in Laumann
and no DIRECTV subscriber remains in Garber. See Laumann, 2012 WL
6043225. This case also involves claims on behalf of plaintiffs who purchases
Internet packages for baseball and hockey programming. They are not alleged to
have agreed to arbitrate their claims.
5

See Memorandum of Law in Support of Comcast and DIRECTV’s
Motion to Stay, No. 12 Civ. 3704 (Dkt. No. 88) (“TV Def. Mem.”). The Supreme
Court granted certiorari in AMEX III on November 5, 2012, see No. 12 Civ. 133,
133 S. Ct. 594 (U.S. Nov. 9, 2012), and the case was argued on February 27, 2013.
6

See Memorandum of Law in Support of Joint Motion by the MLB
Defendants, the Yankees and YES to Stay this Action (“MLB Def. Mem.”).
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entered into arbitration agreements with the TV Defendants – Traub with Comcast7
and Silver with DIRECTV.8 Both agreements contain explicit class action
waivers.9 In AMEX III, the Second Circuit declined to compel arbitration where a
class action waiver contained in an arbitration agreement would “effectively
deprive[] [plaintiffs] of the protection of the federal antitrust-law.”10 The court
recognized that two Supreme Court cases, Stolt-Nielsen S.A. v. AnimalFeeds
International Corp. and AT&T Mobility LLC v. Concepcion “stand squarely for the

7

Traub agreed to arbitrate any “dispute, claim or controversy . . .
regarding any aspect of [his] relationship with Comcast,” which encompasses “all
entities using the brand name ‘Comcast.’” Comcast Customer Privacy Notice § 13,
Ex. 1 to 1/7/13 Declaration of Arthur J. Burke, Counsel for Comcast (“Comcast
Agmt.”).
8

Silver agreed to arbitrate “any legal or equitable claim relating to [his]
Agreement, any addendum, or [his] Service” with DIRECTV. DIRECTV
Customer Agreement § 9, Ex. A to 1/7/13 Declaration of Louis A. Karasik,
Counsel for DIRECTV (“DIRECTV Agmt.”).
9

See Comcast Agmt. § 13(f); DIRECTV Agmt. § 9(c).

10

In re American Exp. Merchants Litig., 667 F.3d 204, 219 (2d Cir.
2012). Specifically, “if plaintiffs cannot pursue their [antitrust] allegations . . . as
a [judicial] class, it is financially impossible for the plaintiffs to seek to vindicate
their federal statutory rights.” Id. Because the Supreme Court’s decision in StoltNielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 130 S. Ct. 1758 (2010)
“plainly precludes any court from compelling the parties to submit to class-wide
arbitration where the arbitration clause is silent as to class-wide arbitration . . . if
[plaintiffs] are not permitted to proceed in a judicial class action . . . [t]he
defendant will [] have immunized itself against all such antitrust liability by the
expedient of including in its contracts of adhesion an arbitration clause that does
not permit class arbitration.” Id.
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principle that parties cannot be forced to arbitrate disputes in a class-action
arbitration unless the parties agree to class action arbitration.”11 However, the
court held that these cases left open the question “whether a mandatory class action
waiver clause is enforceable even if the plaintiffs are able to demonstrate that the
practical effect of enforcement would be to preclude their ability to bring federal
antitrust claims.”12 The Second Circuit answered this question in the negative and
remanded with orders that the judicial class action proceed.13 The Supreme Court
granted certiorari and heard argument on February 27, 2013.14
III.

LEGAL STANDARD FOR GRANTING A STAY
A court “may decide in its discretion to stay civil proceedings”15

pursuant to “the power inherent in every court to control the disposition of the
causes on its docket with economy of time and effort for itself, for counsel, and for

11

In re American Exp. Merchants Litig., 667 F.3d at 213 (citing StoltNielsen, 559 U.S. at 1775; Concepcion, 131 S. Ct. 1740,1750-51 (2011)).
12

Id. at 214.

13

See id. at 219-20.

14

See AMEX III, 133 S. Ct. 594.

15

Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986) (quotation

omitted).
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litigants.’”16 The party seeking the stay “bears the burden of establishing its
need.”17 Factors to consider on a motion to stay include: “(1) the private interests
of the plaintiffs in proceeding expeditiously with the civil litigation as balanced
against the prejudice to the plaintiffs if delayed; (2) the private interests of and
burden on the defendants; (3) the interests of the courts; (4) the interests of persons
not parties to the civil litigation; and (5) the public interest.”18 In balancing these
factors, “the basic goal is to avoid prejudice.”19
IV.

DISCUSSION
TV Defendants argue that a stay is warranted because “[t]he Supreme

Court’s decision in AMEX III . . . could significantly reshape both the Laumann
and Garber cases.”20 Thus, they argue, “‘it would be an inefficient use of time and
resources of the court and the parties to proceed’ before the Supreme Court

16

Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 96 (2d Cir.
2012) (quoting Landis v. North Am. Co., 299 U.S. 248, 254 (1936)).
17

Id. (quoting Clinton v. Jones, 520 U.S. 681, 708 (1997)).

18

In re OxyContin Antitrust Litig., No. 10 Civ. 6038, 2012 WL
5184949, at *6 (S.D.N.Y. Oct. 19, 2012) (internal quotations omitted).
19

Id.

20

Reply in Support of Comcast and DIRECTV’s Motion for Stay (“TV
Def. Rep.”) at 4.
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rules.”21 Moreover, a stay “will not prejudice TV Plaintiffs, and will promote the
strong public policy favoring arbitration.”22 Plaintiffs respond that “[b]ecause
these cases will proceed – on a class basis – against all defendants, including
DIRECTV and Comcast, Defendants cannot possibly show ‘undue prejudice’ in
proceeding . . . according to the existing schedule.”23
TV Defendants do not dispute that, under governing Second Circuit
law the arbitration agreements are unenforceable.24 None of the MLB Defendants
have arbitration agreements with any plaintiffs, and the Internet Plaintiffs do not
have arbitration agreements with any defendants. Moreover, although the MVPDs
are not alleged to have conspired with each other, their involvement in the case is
not limited to claims by their own subscribers. Internet Plaintiffs have implicated
TV Defendants in the blackout agreements in Internet packages. In addition, the
affiliated RSNs are broadcast by multiple non-affiliate MVPDs – a Comcast RSN

21

In re OxyContin Antitrust Litig., 2012 WL 5184949, at *4 (quoting In
re Literary Works in Elec. Databases Copyright Litig., No. 21 M 90, 2001 WL
204212, at *3 (S.D.N.Y. Mar. 1, 2001) (holding that courts frequently stay actions
when a “higher court is close to settling an important issue of law”).
22

TV Def. Mem. at 3.

23

Plaintiffs’ Memorandum of Law in Opposition to Defendants’
Motions to Stay at 4.
24

The parties have stipulated to postpone motions to compel.
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has no legal entitlement to require Silver, a DIRECTV subscriber, to arbitrate his
antitrust claims against the Comcast RSNs and vice versa.25
Thus, while TV Defendants may be correct that a reversal in AMEX
III could ultimately “drastically reduce [their] liability” by eliminating certain
classes of claims against them, they have offered no evidence that their role in the
pretrial proceedings scheduled between now and the likely issuance of a decision
by the Supreme Court would be significantly impacted by the outcome in AMEX
III. The notion that issues of liability in this antitrust case might be resolved before
the Supreme Court rules is truly remote.26
The MLB Defendants’ equally unrealistic solution to the TV
25

The Second Circuit has made clear that a non-signatory to an
arbitration agreement cannot enforce an arbitration clause where its only
relationship to the signatories is as a co-conspirator. See Ross v. American
Express, Inc., 547 F.3d 137, 147 (2d Cir. 2008) (declining to permit American
Express to enforce an arbitration clause between plaintiffs and other credit card
companies based on allegations of a conspiracy absent “some relationship between
Amex and the plaintiffs sufficient to demonstrate that the plaintiffs intended to
arbitrate this dispute with Amex”). See also In re Wholesale Grocery Prods.
Antitrust Litig., No. 11 Civ. 3768, 2013 WL 514758, at *4 (8th Cir. Feb. 13, 2013)
(declining to permit non-signatories to enforce arbitration clauses of other coconspirators where “these antitrust conspiracy claims do not involve violation of
the terms of the contract, the face of the contract does not provide the basis for the
alleged injuries, and there is no evidence that the contract anticipated the precise
type of relationship giving rise to the claims”).
26

Currently, plaintiffs’ class certification motions are due June 17, 2013.
Fact discovery closes on October 18, 2013. See 1/3/13 Scheduling Order (Garber
Dkt. No. 85).
-8-

Defendants’ entanglement in the case is to request a stay of the entire case pending
the hypothetical arbitration of two plaintiffs’ claims with two defendants. Their
rationale rests on multiple layers of highly optimistic speculation – that the
Supreme Court will reverse AMEX III, that the TV Plaintiffs will pursue their
claims against the TV Defendants in arbitration despite the Second Circuit’s
finding that arbitration is prohibitive of just such claims, and finally, that this Court
might, in its discretion, stay the entire antitrust case, including that of the Internet
Plaintiffs, against the alleged core participants in the agreements – the Leagues
themselves – pending the outcome of plaintiffs’ arbitration claims.27
Nor is it the case, as TV Defendants argue, that because “TV Plaintiffs
have sued the MVPD and RSN Defendants in an attempt to get around Illinois
Brick’s indirect purchaser rule . . . dismissal of all TV Plaintiffs’ claims against the
MVPD and RSN Defendants would bear on the Illinois Brick issues.”28 The fact
that plaintiffs may have no judicial recourse against certain alleged conspirators in

27

See MLB Def. Mem. at 2 (“The Second Circuit has recognized that,
where some claims involving some parties are stayed pending arbitration,
extending that stay to all other interrelated, but non-arbitrable, claims involving
other parties furthers the ‘strong federal policy’ favoring arbitration.”) (citing
WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 76 (2d Cir. 1997)). The MLB
Defendants do not suggest that they would be entitled enforce the arbitration
agreements.
28

TV Def. Rep. at 7.
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an anti-competitive agreement because of arbitration agreements has no bearing on
the viability of their claims against core members of the alleged conspiracy.
TV Defendants have failed to show that staying this case, which is
currently in fact discovery, pending a decision in AMEX III, would avoid
significant prejudice to their rights to arbitrate claims with their subscribers. If, the
Supreme Court reverses in AMEX III or, if this case proceeds to a stage where
irreparable harm is a genuine threat, the Court can reconsider whether a stay is
warranted. In the meantime, staying the case would merely delay litigation and
likely result in greater inefficiencies to the Court and litigants than simply
permitting the litigation to proceed on schedule.

v.

CONCLUSION
For the foregoing reasons, defendants' motions to stay are denied in

full. The Clerk of the Court is directed to close theses motions (Garber Dkt. Nos.
87,90; Laumann Dkt. No. 100).

Dated:

New York, New York
March 6, 2013
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- Appearances For Plaintiffs:
Kevin M. Costello, Esq.
Gary E. Klein, Esq.
Kevin R. Costello, Esq.
Klein Kavanagh Costello, LLP
85 Merrimac St., 4th Floor
Boston, Massachusetts 02114
[phone]
Edward A. Diver, Esq.
Howard I. Langer, Esq.
Peter E. Leckman, Esq.
Langer Grogan & Diver, P.C.
Three Logan Square, Suite 4130
1717 Arch Street
Philadelphia, Pennsylvania 19103
[phone]
Michael Morris Buchman, Esq.
John A. Ioannou, Esq.
Pomerantz Haudek Block Grossman & Gross LLP
600 Third Avenue
New York, New York 10016
[phone]
Alex Schmidt, Esq.
Mary Jane Fait, Esq.
Wolf Haldenstein Adler Freeman & Herz LLP
270 Madison Avenue
New York, New York 10016
[phone]

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Robert LaRocca, Esq.
Kohn, Swift & Graf, P.C.
One South Broad Street
Suite 2100
Philadelphia, Pennsylvania 19107
[phone]
J. Douglas Richards, Esq.
Jeffrey Dubner, Esq.
Cohen, Milstein, Sellers & Toll, PLLC
88 Pine Street
New York, New York 10005
[phone]
For Defendants Office of the Commissioner of Baseball, Major League
Baseball Enterprises Inc., MLB Advanced Media L.P., MLB Advanced
Media, Inc., Athletics Investment Group, LLC, The Baseball Club of
Seattle, L.L.P., Chicago White Sox, Ltd., Colorado Rockies Baseball Club,
Ltd., The Phillies, Pittsburgh Baseball, Inc., and San Francisco Baseball
Associates, L.P.
Bradley I. Ruskin, Esq.
Carl Clyde Forbes, Esq.
Helene Debra Jaffe, Esq.
Jennifer R. Scullion, Esq.
Robert Davis Forbes, Esq.
Proskauer Rose LLP
11 Times Square
New York, New York 10036
[phone]
Thomas J. Ostertag, Esq.
Senior Vice President and General Counsel
Office of the Commissioner of Baseball
245 Park Avenue
New York, New York 10167
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[phone]
For Defendants National Hockey League, NHL Enterprises, L.P., NHL
Interactive Cyberenterprises, LLC, Chicago Blackhawk Hockey Team, Inc.,
Comcast-Spectacor, L.P., Hockey Western New York LLC, Lemieux Group,
L.P., Lincoln Hockey LLC, New Jersey Devils LLC, New York Islanders
Hockey Club, L.P. and San Jose Sharks, LLC
Shepard Goldfein, Esq.
James A. Keyte, Esq.
Paul M. Eckles, Esq.
Matthew M. Martino, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
[phone]
For Defendants DirecTV, LLC, DirecTV Sports Networks, LLC, DirecTV
Sports Net Pittsburgh, LLC a/k/a Root Sports Pittsburgh, DirecTV Sports Net
Rocky Mountain, LLC a/k/a Root Sports Rocky Mountain, and DirecTV
Sports Net Northwest, LLC a/k/a Root Sports Northwest
Andrew E. Paris, Esq.
Joann M. Wakana, Esq.
Louis A. Karasik, Esq.
Alston & Bird LLP
333 South Hope Street
Los Angeles, California 90071
[phone]
For Defendants Comcast Corporation, Comcast SportsNet Philadelphia, L.P.,
Comcast SportsNet Mid-Atlantic L.P., Comcast SportsNet
California, LLC, and Comcast SportsNet Chicago, LLC
Arthur J. Burke, Esq.
James W. Haldin, Esq.
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Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
[phone]
For Yankees Entertainment and Sports Networks, LLC and New York
Yankees Partnership
Jonathan D. Schiller, Esq.
Alan Vickery, Esq.
Christopher Duffy, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue, 7th Floor
New York, New York 10022
[phone]
For Defendants The Madison Square Garden Company and New York
Rangers Hockey Club
Marc Laurence Greenwald, Esq.
Stephen R. Neuwirth, Esq.
Richard I. Werder, Jr., Esq.
Ben M. Harrington, Esq.
Quinn Emanuel Urquhart Oliver and Sullivan LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
[phone]

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